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2. ACA 6055/6056 Reporting Requirements: Forms 1094/5-B and 1094/5-C
Presented by:
Joe Lazzarotti
March 10, 2015
ACA 6055/6056 Reporting Requirements: Forms 1094/5-B and 1094/5-C

3. About the Firm
Represents management exclusively in every aspect of employment, benefits, labor, and immigration law and related litigation.
750 attorneys in 55 locations nationwide.
Current caseload of over 6,500 litigations and approximately 415 class actions.
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4. Strategically Located Throughout the Nation to Serve Employers’ Needs
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5. Disclaimer
This presentation provides general information regarding its subject and explicitly may not be construed as providing any individualized advice concerning particular circumstances. Persons needing advice concerning particular circumstances must consult counsel concerning those circumstances. Indeed, health care reform law is highly complicated and it supplements and amends an existing expansive and interconnected body of statutory and case law and regulations (e.g., ERISA, IRC, PHS, COBRA, HIPAA, ADA, GINA, etc.). The solutions to any given business’s health care reform compliance and design issues depend on too many varied factors to list, including but not limited to, the size of the employer (which depends on complex business ownership and employee counting rules), whether the employer has a fully-insured or self-funded group health plan, whether its employees work full time or part time, the importance of group health coverage to the employer’s recruitment and retention goals, whether the employer has a collectively-bargained workforce, whether the employer has leased employees, the cost of the current group health coverage and extent to which employees must pay that cost, where the employer/employees are located, whether the employer is a religious organization, what the current plan covers and whether that coverage meets minimum requirements, and many other factors.

6. Topics for Discussion Review some key ACA issues
Working with Forms 1094-B/1095-B and C/1095-C
The Why, When, What and How to file and furnish
Working with the Forms
Tasks for getting ready

7. Review: What Full-Time Means
Full-time = employed on average for 30 hours of service per week (130 hours per month)
Calculation of “hours of service”
Hour of service: each hour employee is paid or entitled to payment
Includes hours for which no services are performed, but payment is owed by employer (i.e., on-call or paid leave time)
Hourly – count actual hours
Non-hourly – count actual hours or use equivalency rules
Daily – any time during a day equals 8 hours
Weekly – any time during a week equals 40 hours

8. Review: What Full-Time Means
Measurement period approach – look-back v. monthly measurement periods
On-going employees, new employees
Changes in employment status or position
Special leaves of absence – FMLA and USERRA
13-week Break in Service
Special rules for education organizations

9. Review: Controlled Group Rules
Parent-subsidiary group – an entity has an 80% or more controlling interest in another entity
Brother-sister group – same 5 or fewer people (or trusts/estates) together own at least 80% of each entity and, taking into account the ownership interest of each owner only to the extent identical with respect to each entity, the owners hold more than 50% of each entity
Affiliated service group – service organizations (e.g., medical practice, architectural firm) where one performs services for the other or management function group
Attribution rules apply
Reasonable, good faith interpretation by churches and governmental entities

10. Review: What it Means to “Offer” Coverage
EE must have effective opportunity to accept coverage at least once per year (offer of coverage by employer must be reasonable)
If coverage is not affordable or does not meet minimum value, EE must also have had effective opportunity to decline coverage
Offer is effective for a given month only if coverage is effective for full month if EE accepts offer
Offers for “temporary” or “staffing” employees
Offer not negated by EE waiver of coverage or employer dropping EE’s coverage for nonpayment of premium
Documenting of waiver is not required, but good practice if practical

11. Mandatory Reporting Code §§ 6055 and 6056
Why do we have to report?
Verify individuals met individual mandate through “minimum essential coverage” or “MEC” – Section 6055
Enforce the employer shared responsibility under 4980H – Section 6056
Confirm eligibility for premium tax credits – Section 6056
When do we have to start reporting?
Requirement begins for 2015; 2014 optional
Transition rules do not delay reporting for smaller ALEs – between 50 and 99 FT employees

12. Mandatory Reporting Code §§ 6055 and 6056
When are the returns/statements due?
Returns: February 28 of the following year (March 31, if filed electronically)
Statements: January 31 of the following year (February 1, 2016)
Can someone else do the filing for us?
Yes. A third party, including another ALE member of the same controlled group, may complete the filing
A name and telephone number needs to be provided for the agent of the ALE member doing the reporting
Special rules for governmental filers

13. Mandatory Reporting Code §§ 6055 and 6056
Do we have to file electronically?
Yes, if you file 250 or more returns for during the calendar year, the returns have to be filed electronically
Statements may be furnished electronically under rules similar to those applicable to W2s presently. In general:
Affirmative consent
Change in hardware/software
Required disclosure (prior to or at time of consent)
Required format
Rules for posting on website
Required access period

14. Mandatory Reporting Code §§ 6055 and 6056
What forms are used for reporting?
1094-B/1095-B
Used by providers of MEC – insurers, some employers, others
1094-B Transmittal – Identifies the filer
1095-B Report – Identifies responsible individual, type of coverage, employer sponsor of insured coverage, coverage provider, and enrollment of covered individuals

15. Mandatory Reporting Code §§ 6055 and 6056
What forms are used for reporting? (ctd.)
1094-C/1095-C – Applicable Large Employers (ALEs)
1094-C Transmittal
Cover page for 1095-Cs, which may be submitted in groups
But, must have one “Authoritative Transmittal”
Used to demonstrate ESR (4980H) compliance on aggregate basis
Covers application of certain transition rules
Controlled group participation

16. Mandatory Reporting Code §§ 6055 and 6056
What forms are used for reporting? (ctd.)
1094-C/1095-C – Applicable Large Employers (ALEs)
1095-C Report/Statement
Part I – Identifies common law employee of ALE
Part II – Confirms whether ALE met ESR with respect to employee in Part I – focuses on coverage offered.
Part III – Reporting for self insured coverage – will show whether employee and dependents had coverage for any day in each month.

17. Mandatory Reporting Code §§ 6055 and 6056
Forms in practice
Situation
Employer
Insurer
FT employee covered by insured plan
1095-C – showing months coverage is offered
1095-B – showing months covered
Non-FT employee covered by insured plan
No reporting required
1095-B – showing months of covered
FT employee covered by self-insured plan
1095-C – showing months covered and offer of coverage
N/A
Non-FT employee covered by self-insured plan
1095-C – showing months covered, offer info not needed

18. Mandatory Reporting Code §§ 6055 and 6056
Forms in practice
Situation
Employer
Insurer
FT employee declines offer of insured coverage
1095-C – showing months coverage is offered
N/A
Non-FT employee declines offer of insured coverage
No reporting required
FT employee declines offer of self-insured coverage
Non-FT EE declines offer of self-insured coverage

19. Mandatory Reporting Code §§ 6055 and 6056
Let’s take a look at Form 1094-C
Lines 23-35
Col. (a) – MEC: Check yes or no; check yes if you meet the 70% transition rule.
Col. (b) – # of FT EEs
Col. (c) – # of all employees
Col. (d) – Controlled group for the month
Col. (e) – Application of certain transition rules

20. Mandatory Reporting Code §§ 6055 and 6056
Let’s take a look at Form 1095-C – Part II
Line 14 – Offer of Coverage
Use the appropriate indicator code from Code Series 1. See Instructions p. 7
Line 15 – EE Share of Cost of Coverage
Complete only if Code 1B, 1C, 1D or 1E entered on Line 14 (MEC is offered, but not Qualifying Offer)
Enter the lowest, monthly, self-only premium, even if employee elected more expensive coverage
Line 16 – Safe Harbor/Relief Codes
Use the appropriate indicator code from Code Series 2. See Instructions p. 7-8

21. Mandatory Reporting Code §§ 6055 and 6056
Let’s take a look at Form 1095-C – Part III
Complete only for self-insured coverage in which an individual is enrolled.
Include enrolled employees, whether FT or not FT.
Include family member, covered on same form as employee
Check box (d) for a line if the person was covered at least one day in every month in the year

22. Mandatory Reporting Code §§ 6055 and 6056
The draft instructions said to report self- insured coverage for non-employees on Form 1095-B, is that still true?
No. The ALE member could report the non-employee covered under the self-insured plan on Form 1095-C.
“Non-employees” include – COBRA participants, non-employee directors, partners, and retirees.
Reporting is made in Part III for any non-employee that was not an employee for any calendar month in the year. Part II must be completed using Indicator Code “1G” for all 12 months.
All covered family members must be reported on same Form C, or 1095-B.

23. Mandatory Reporting Code §§ 6055 and 6056
What if one of our ALE members has no EEs or EEs with no hours of service?
No reporting is necessary for that ALE member.
We contribute to a multiemployer plan?
These ALE members will be deemed to satisfy the ESR mandate with respect to FT employees on whose behalf it is making contributions (even if EE is not eligible for the coverage), so long as the multiemployer plan is offering MV, affordable coverage.
ALE member enters Line 2E on Line 16, Form 1095-C; Fund sends Form 1095-B to employee.
ALE member and Fund have to coordinate about when coverage commences.

24. Mandatory Reporting Code §§ 6055 and 6056
Do we have to report SSNs of our employees and their dependents?
Forms 1095-C furnished to employees may be truncated – only last 4 digits; not permitted for Forms filed with IRS
For self-insured plans, Part III requires SSNs of employee dependents, unless ALE either (i) exhausts reasonable collection efforts, (ii) or meet certain requirements for limited reporting.
ALE can use dependent’s date of birth, only if no SSN after “reasonable efforts”: no SSN after an initial attempt, and two subsequent attempts.
ALE should be taking steps during the year, and documenting those efforts.

25. Mandatory Reporting Code §§ 6055 and 6056
What are the penalties if we fail to comply?
Section 6721 penalizes failure to (i) file timely information returns, (ii) include all the required information, and (iii) include correct information on the return.
Section 6722 penalizes failure to (i) timely furnish the statement, (ii) include all the required information, or (iii) include correct information on the statement.
$100 for each return with respect to which such a failure occurs, up to calendar year maximum - $1,500,000
For 2015, IRS will not impose penalties under sections 6721 and on ALE members that can show that they have made good faith efforts to comply with the information reporting requirements.

26. Simplified Reporting Alternatives for “Qualifying Offers”
Qualifying Offer Method. “Qualifying Offer”:
Offer the employee MEC providing minimum value at a self-only cost not in excess of 9.5% of the Federal Poverty Level, AND
Offer MEC to the employee’s family (spouse and children)
ALE member that extends Qualifying Offer for a month need not include the cost of the least expensive option for MV coverage.
ALE member that extends Qualifying Offer for all 12 months, ALE member need not furnish Form 1095-C to those who did not enroll, but must provide statement that employee received Qualifying Offer and is not eligible for premium subsidies.
BUT must furnish 1095-C, Part III to those employees who enrolled in self insured coverage

27. Simplified Reporting Alternatives for “Qualifying Offers”
Qualifying Offer Transition Relief for ALE member that extends Qualifying Offer for some but not all 12 months:
Still must furnish Form 1095-C unless ALE member satisfies conditions for Qualifying Offer Transition Relief for 2015
Conditions for Qualifying Offer Transition Relief for 2015 are met if ALE member makes Qualifying Offer to at least 95% of FT employees for one or more months in 2015.
If satisfied: (i) Qualified Offer relief; (ii) for employee that does not receive a Qualifying Offer for the year, send statement to that employee (rather than 1095-C) stating that individual may qualify for premium tax credit.

28. Simplified Reporting Alternatives for “Qualifying Offers”
98% Method. ALE member offers minimum value, affordable coverage for all months during the year to 98% of employees for whom it is filing 1095-C, including offering MEC to dependents:
Still must complete Form 1095-C for FT employees and PT employees with self insured coverage.
When completing 1094-C, ALE member need not report FT employee counts for each month of the year.

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